The S&P 500 surged to a record high of $6,160 in late June. Historically, when such chart patterns occur, prices often retreat to the breakout level afterward. Right now, the daily chart shows not only a slowdown in upward momentum but also the formation of a sideways trend, which signals a potential bearish correction. If that plays out, the S&P 500 might not just pull back to $6,160 but extend its decline toward $6,000.
From a fundamental perspective, the index is under pressure due to the unclear US tariff policies and the associated investment risks, uncertain economic growth prospects, and labor market instability. Yet, the market appears complacent, having grown accustomed to volatility, as it has seen that the sharp sell-offs following Trump’s April statements didn’t lead to any catastrophic outcomes and prices quickly recovered. As a result, Trump’s latest proposal to impose 30% tariffs on Canada, the EU, and Mexico hasn’t triggered panic in the market.
On top of that, as long as the current Fed chair stays in his position, monetary easing is unlikely, which will continue to weigh on the stock market. What makes this particularly tricky is that if Powell were to be removed from his post, it could actually spark an even more severe market downturn. Investors would interpret this as Trump ousting Powell and the Fed losing its independence. And that would be far worse for markets than just keeping rates relatively high.
The overall recommendation is to sell the S&P 500.
Profits should be taken at the level of 6,170. A Stop loss could be set at the level of 6,140.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
